Trump's 25% tariff to reduce Japan's GDP by 0.8% in 2025: think tank
Over the longer term through 2029, the newly set levy that takes effect on Aug. 1 is estimated to cut Japan's GDP by 1.9 percent, the Daiwa Institute of Research said.
Together with other tariffs already imposed by Trump, including the 27.5 percent duty on automobiles, the U.S. trade policy could dent Japan's economy by 1.3 percent in 2025 and 3.7 percent in 2029, the think tank said.
Koki Akimoto, an economist at the think tank, said the country-specific tariff, if implemented, will likely have a broad impact on the Japanese economy, ranging from lower production levels for exports and reduced capital investment.
Under the so-called reciprocal tariffs, Trump's administration has imposed a baseline duty of 10 percent covering imports from almost all countries in the world, aside from sector-based levies.
On Monday, Trump set a new rate of 25 percent for Japan, slightly higher than 24 percent initially announced, while leaving the door open for further negotiations.
Takahide Kiuchi, executive economist at the Nomura Research Institute, projected, in total, Trump's tariffs could reduce Japan's GDP by 0.85 percent in around a year.
"If they are applied, the Japanese economy is likely to gradually fall into a recession by next year with a probability of (that occurring at) more than 50 percent," he said.
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